Startup Metrics – Scale

If you are a founder you have likely faced the dreaded scale question: Is this scalable? After asking the question myself, I realized that I didn’t know what it meant. I am still trying to figure out.

Here are some steps to answer the question:

  1. Ask the person to clarify the question, and determine whether they are thinking about scale in a specific way.
  2. Say you are not focused on scale right now. You are doing things that don’t scale on purpose.
  3. Use specific examples of small wins, when possible with a time dimension: i. Revenue is growing, even when number of people on the team doesn’t, ii. Revenue has been achieved in another city or country without having a local team, iii. Sales cycle has decreased due to streamlined processes, iv. Customers are coming back to buy more often, v. A new sales channel results in reaching more clients with the same effort, vi. You have resold existing software or content to another customer
  4. Use benchmarks of successful startups in your industry or with a similar business model and talk about how they have grown.
  5. Walk through a scenario of how your startup could grow over time. Answer the questions: “how does this get really big?” or “what does this look like in an optimal case?” This will show investors you are thinking big and also have an idea how to get there.

One way to think about scale is exerting less effort to achieve the same or more value over time.  Start analyzing your business model and have conversations with investors and advisors about how to grow your business in a non-linear way.

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